Oct. 8, 2013
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Jim Yong Kim is president of the World Bank. / Jack Gruber, USA TODAY

by Susan Page, USA TODAY

by Susan Page, USA TODAY

WASHINGTON - The president of the World Bank warned Tuesday that congressional maneuvering over raising the debt limit could have dire consequences for the global economy and the world's poorest people.

The effects of a default would be "really severe," Jim Yong Kim told USA TODAY's Capital Download, but even a period of uncertainty as the Treasury Department's Oct. 17 deadline approaches could unnerve stock markets and increase borrowing costs for developing countries.

"The notion that getting close to the 17th and then in the final minute doing something heroically, that will have an impact," he said in an interview with the weekly video newsmaker series at World Bank headquarters, where its annual meetings are being held this week. He issued a plea for members of Congress who are now debating what to do. Some Republican lawmakers have expressed skepticism that failing to raise the debt limit would have catastrophic economic repercussions.

"Please consider politics beyond the Beltway, politics beyond your own districts," Kim said. "Really think about the impact that inaction can have on poor mothers in Africa, trying to feed their children. It will really have an impact on those mothers. It will have an impact on young men and women trying to create businesses in the Middle East. This is real. This is not a theoretical impact. It's very real."

In August 2011, when the debt ceiling was raised only at the last minute, the impact on developing countries was substantial and persisted for months, he said. "Right now, emerging economies and developing countries can't afford another set of headwinds in their effort to try to grow their economies."

A report from the International Monetary Fund on Tuesday on the world economic outlook warned that risks to the global economy were building, including potential damage from the U.S. partial government shutdown if it continues for an extended period of time.

Kim, 53, born in Korea, immigrated to the United States with his family when he was 5 years old and grew up in Muscatine, Iowa. With a medical degree and a doctorate in anthropology, he co-founded Partners in Health, which delivers medical services in the developing world, and served as president of Dartmouth College before taking over the World Bank last year.

A huge banner declaring "End Poverty" is stretched across the side of the World Bank headquarters, along Pennsylvania Avenue. That reflects a goal set by Kim and the bank's board of governors this year to ending extreme poverty around the world by 2030.

To achieve that, Kim said, the institution is focusing on "transformative projects," including in fragile and conflict-ridden countries. "These projects are inherently riskier," he said, but have the potential to change entire regions.

"There's no question we could have spectacular failures," he said. "But I always make the point that I come from a profession where the most important thing that we do with spectacular failures is to understand exactly why they failed." For a doctor, when a patient dies the key task is to figure out why, and what to do better next time.